This research reports the influence of the mechanical properties of thermoplastic polyurethane (TPU) as a function of wood filler percentage. Wood flour was mixed with two different chemically based TPUs. Also, moisture content during compounding process as well as the origin of moisture (wood or TPU) were studied. All experimental designs and statistical analysis were done with the software Design Expert Version 10. Composite preparation took place in a multi‐stage process. The results showed that 70% wood filler can be incorporated in the composite manufacture. The properties of the composite were mainly influenced by the proportion of wood and TPU. Wood flour increased the density, hardness, water absorption, and tensile modulus with a decrease in impact resistance and abrasion resistance of the composite. Tensile strength exhibited a decrease up to ∼35% wood content, but an increase with further addition of wood. Moisture content had only a minor influence on the mechanical and water absorption properties despite the noted severe moisture sensitivity of TPU, which usually leads to decline in mechanical properties. © 2018 Wiley Periodicals, Inc. J. Appl. Polym. Sci. 2018, 135, 46344.